Pilbara property prices to fall in Karratha
- Thread starter sammmeee
- Start date
You don't see any effect Ian?
The project is worth $1.5bn.
The State Govt is contributing $130m, or 8.7% of the amount. And no doubt some cheap land as well as part of the "development agreement".
Mirvac has to make a developer's margin on the total build and holding costs which, courtesy of the apartment model, will be far more expensive per m2 than the traditional housing model (that's why it hasn't been used before - houses are both cheaper and quicker to build).
Stage 1 completion scheduled for mid 2014.
With all these factors I just can't see the final value of these lots coming in any cheaper than what you have to pay now, especially when you consider the PITA factor of having to live in an apartment - where do you park your boat or have a BBQ with all your mates? If you can't do that stuff what else is there to do? Drink coffee in the air conditioning? And Mirvac is only going to build this stuff if they know they can offload the product at the right price. So I don't know how this will make anything cheaper, especially by then.
But you never know - I could be wrong. You pays your money and takes your chances.
Cottesloe of the north? What a joke!
The State Govt is contributing $130m, or 8.7% of the amount. And no doubt some cheap land as well as part of the "development agreement".
Mirvac has to make a developer's margin on the total build and holding costs which, courtesy of the apartment model, will be far more expensive per m2 than the traditional housing model (that's why it hasn't been used before - houses are both cheaper and quicker to build).
Stage 1 completion scheduled for mid 2014.
With all these factors I just can't see the final value of these lots coming in any cheaper than what you have to pay now, especially when you consider the PITA factor of having to live in an apartment - where do you park your boat or have a BBQ with all your mates? If you can't do that stuff what else is there to do? Drink coffee in the air conditioning? And Mirvac is only going to build this stuff if they know they can offload the product at the right price. So I don't know how this will make anything cheaper, especially by then.
But you never know - I could be wrong. You pays your money and takes your chances.
Cottesloe of the north? What a joke!
G’day Redwing, Seabreeze & All,
I see these types of announcements as:
• Political propaganda first & foremost.
• Amidst the chest puffing and mutual adulation & egocentric adoration on display there will be uttered a couple of sentences with substance.
• From this we can then discern if we are lucky, a modicum of truth, a molecule of fact and an atom of, “this will actually happen.”
Back to the article:
Although not specifically discussed in this announcement one needs to factor in a significant portion of the $1.5 billion for funding of infrastructure which is seriously absent in Karratha; things like increased capacity for sewage treatment, residential roads, underground power (a partial program is underway currently). There has to be provision for considerably increased demand on water supply from the recently upgraded water plant at Harding Dam.
In considering any development of Mulataga (which in English translates to mosquito & sand-fly swamp), major, major earthworks & storm surge and flood management break walling, canals and engineered drainage returns to the sea will have to be constructed……imagine Mandurah canals but many metres higher and indeed further inland from the shell grit beachfront as such. The whole Mulataga precinct is at or below sea level and is already impacted by high tides and seasonal flooding. A major reclamation project is necessary. Storm water run off from the adjacent hills area will also need engineering & money thrown at it.
Depending on the groundswell of objection and impact by those interested in the mating rituals of dugong and the root structure of mosquito festooned shrubbery, there will no doubt be delays & cost overruns as Mirvac is forced to take out a subscription to the Greenpeace monthly newsletter. This coupled with Mirvacs’ own workers going AWOL to try and hook some muddies in company time will need to be considered & managed.
One also needs to factor in a significant portion of the $ for the provision of any commercial & retail construction, car parking, ancillary civil works, footpaths, gardens, new commercial zone(s) roads etc. The 5 sites mentioned will suck up most of the $1.5 billion if they all come to fruition; so I would suggest the commercial & retail stuff will emanate as staged development, but only if there is absolute demand for it. The fact that the 5 separate areas are disjointed by distance will add to costs of construction…..it’s not as though the individual development sites are next door to each other thereby allowing for continuity.
Currently, I find it hard to see a burgeoning demand from the business sector for this supply. There is some, but not a lot. It will come in time but not at the rate that Grylls & Co care to spruik. I would point people in the direction of Broome and the similar massive growth & expansionist propaganda West Australians were subjected to a few years ago. Residentially, Broome has grown at an impressive rate and continues to do so, but the commercial, retail & industrial sectors have not developed to the extent that warrant political proponents being backslapped by the sycophantic minions they employ to lick stamps and make really bad cups of tea. On a larger scale than Broome, how long has Geraldton been in the headlines for “massive development & spending”? It too has come along at a pace only marginally quicker than being bludgeoned to death by a feather being swung at furious pace & force.
What these oxygen-thieving figureheads also prefer not to talk about in detail is the massive dollar cost of doing business anywhere north of Geraldton. It is not easy for people to come along and start up a small business unless they have a significant amount of venture capital behind them. Electricity & refrigerated air conditioning costs, council rates and insurances are huge and will only continue to increase as the Roebourne Shire attempts to foot the bill for its part of the implementation & ongoing maintenance of any such infrastructure it becomes the custodian of.
The wages by default of the historic & current costs of living in Karratha have to be high to attract people to go and live there in the first instance – the heat & arid landscape while an attraction to some, are a disincentive to most, especially after 1 or 2 yrs there, so retention of workers is very, very difficult.
Now, in looking at the residential situation, this announcement with Mirvac is on todays $ value allowing for a hotel which will cater for short stay overnighters and will have absolutely no impact on the larger residential market. There will be up to some 1500 residential lots (staged releases depending on demand) and a nominal amount (50 dwellings / air cond dongas) for workers accommodation. This isn’t just on these numbers going to put much pressure on the current property market there. There will be some initial uptake of existing Finbar Pelago East & West apartments by out of town investors who don’t know any better, there will be some uptake of residential lots by some investors familiar with the Karratha market (they will be as selective as they can be if lots are by ballot) and there will be a degree of uptake by the “parkies”, caravan dwellers who up to now have not been able to enter the property market there.
If we reflect for a moment on the Finbar Pelago “twin towers” development, across the way from the Crane Circle knock shop, you will see the asking prices are not exactly buyer friendly nor are some of the advertised rental rates (search RE.com.au). Given the currency of this Finbar project, it is hard to imagine that anything Mirvac construct or get involved with in the near future won’t give them a significant ROI. They simply are not going to build without profit as Seabreeze has rightly pointed out.
To continue on from the comments by Seabreeze, the nature of the beast in living in this part of the country says that families want to have their space, for their esky and boat, privacy and their own pool preferably free of jiggyboos coming down for their six monthly bath. So apartment style living won’t be on their agenda. So who else is going to pay $500K, $600K, and $900K for a shoebox with a view over suicide beach, or the delightful architectural expanse of Bulgara? The only ones who will buy will be perhaps a handful of cashed up companies with no regard for future expenditure, or investors who delight in gloating they have rental guarantees as part of the experience, and finally there will be those wannabe investors who bought in Docklands deciding to submit to another fiscal whooping.
So, now to the residential subdivision component of Mulataga:
If divine intervention facilitates this proposed development and blocks of land are made available to the masses either by Ballot, or by camping out in deepest, darkest (pun intended) Bulgara and surviving the night without getting bashed by jiggyboos, white trash or just having a knuckle dragging, smelly backpacker roofer trip over you because he’s been to the Tavern all night, he’s done 6 rounds with the gully monster and is now doing his best impersonation of a smashed crab trying to mate with one of the dugongs mentioned earlier, you manage to secure an allotment for under $250K, the only thing you need to consider then is how the hell am I going to afford the extra $600K to build a 4x2 with jiggyboo free swimming pool. I know, we can get those guys in Hedland that are importing sea containers from China to put one on the block for $400K – the missus won’t even notice the difference.
For anyone and I mean anyone from Premier Barnett down who thinks Karratha pricing will be impacted on to the point where housing becomes affordable because of this Mirvac arrangement, I’m sorry but I don’t believe it will be so. The apartments may feel the impact of an oversupply if the timing of construction and sales is poor, but residential land and ensuing construction of homes will remain prohibitively expensive.
From my limited, naïve, bitter & twisted perspective of life the universe & everything, I believe property pricing in the region will only be pushed down by a mixture of high interest rates and a massive drop in demand for resources in China & India, or if North Korea decides to once and for all blow the bejesus out of Japan with its nuclear arsenal to the point where Japan doesn’t need LNG any more.
So where does this leave us as interested property investors looking at Karratha from the outside? I think the wise, the researched & the creative ones will remain positive and reap varying degrees of reward.
Where does it leave Karratha future pricing? I think it will remain relatively insular, so purchase prices and rents will continue to be expensive and generally over and above Perth Metro area (interest rates, international resources demand and northern hemisphere non-nuclear activity remaining equal).
What will the future residential landscape of Karratha look like? Depends on how big the next really big cyclone is and whether all the smelly, drunken, backpacker roofers that tripped over and partially mated with you when you camped out for a block of land put in the really long Tek screws or the short ones!!
So, back to the article………….it’s not even one tenth of the real story.
Ian.
I see these types of announcements as:
• Political propaganda first & foremost.
• Amidst the chest puffing and mutual adulation & egocentric adoration on display there will be uttered a couple of sentences with substance.
• From this we can then discern if we are lucky, a modicum of truth, a molecule of fact and an atom of, “this will actually happen.”
Back to the article:
Although not specifically discussed in this announcement one needs to factor in a significant portion of the $1.5 billion for funding of infrastructure which is seriously absent in Karratha; things like increased capacity for sewage treatment, residential roads, underground power (a partial program is underway currently). There has to be provision for considerably increased demand on water supply from the recently upgraded water plant at Harding Dam.
In considering any development of Mulataga (which in English translates to mosquito & sand-fly swamp), major, major earthworks & storm surge and flood management break walling, canals and engineered drainage returns to the sea will have to be constructed……imagine Mandurah canals but many metres higher and indeed further inland from the shell grit beachfront as such. The whole Mulataga precinct is at or below sea level and is already impacted by high tides and seasonal flooding. A major reclamation project is necessary. Storm water run off from the adjacent hills area will also need engineering & money thrown at it.
Depending on the groundswell of objection and impact by those interested in the mating rituals of dugong and the root structure of mosquito festooned shrubbery, there will no doubt be delays & cost overruns as Mirvac is forced to take out a subscription to the Greenpeace monthly newsletter. This coupled with Mirvacs’ own workers going AWOL to try and hook some muddies in company time will need to be considered & managed.
One also needs to factor in a significant portion of the $ for the provision of any commercial & retail construction, car parking, ancillary civil works, footpaths, gardens, new commercial zone(s) roads etc. The 5 sites mentioned will suck up most of the $1.5 billion if they all come to fruition; so I would suggest the commercial & retail stuff will emanate as staged development, but only if there is absolute demand for it. The fact that the 5 separate areas are disjointed by distance will add to costs of construction…..it’s not as though the individual development sites are next door to each other thereby allowing for continuity.
Currently, I find it hard to see a burgeoning demand from the business sector for this supply. There is some, but not a lot. It will come in time but not at the rate that Grylls & Co care to spruik. I would point people in the direction of Broome and the similar massive growth & expansionist propaganda West Australians were subjected to a few years ago. Residentially, Broome has grown at an impressive rate and continues to do so, but the commercial, retail & industrial sectors have not developed to the extent that warrant political proponents being backslapped by the sycophantic minions they employ to lick stamps and make really bad cups of tea. On a larger scale than Broome, how long has Geraldton been in the headlines for “massive development & spending”? It too has come along at a pace only marginally quicker than being bludgeoned to death by a feather being swung at furious pace & force.
What these oxygen-thieving figureheads also prefer not to talk about in detail is the massive dollar cost of doing business anywhere north of Geraldton. It is not easy for people to come along and start up a small business unless they have a significant amount of venture capital behind them. Electricity & refrigerated air conditioning costs, council rates and insurances are huge and will only continue to increase as the Roebourne Shire attempts to foot the bill for its part of the implementation & ongoing maintenance of any such infrastructure it becomes the custodian of.
The wages by default of the historic & current costs of living in Karratha have to be high to attract people to go and live there in the first instance – the heat & arid landscape while an attraction to some, are a disincentive to most, especially after 1 or 2 yrs there, so retention of workers is very, very difficult.
Now, in looking at the residential situation, this announcement with Mirvac is on todays $ value allowing for a hotel which will cater for short stay overnighters and will have absolutely no impact on the larger residential market. There will be up to some 1500 residential lots (staged releases depending on demand) and a nominal amount (50 dwellings / air cond dongas) for workers accommodation. This isn’t just on these numbers going to put much pressure on the current property market there. There will be some initial uptake of existing Finbar Pelago East & West apartments by out of town investors who don’t know any better, there will be some uptake of residential lots by some investors familiar with the Karratha market (they will be as selective as they can be if lots are by ballot) and there will be a degree of uptake by the “parkies”, caravan dwellers who up to now have not been able to enter the property market there.
If we reflect for a moment on the Finbar Pelago “twin towers” development, across the way from the Crane Circle knock shop, you will see the asking prices are not exactly buyer friendly nor are some of the advertised rental rates (search RE.com.au). Given the currency of this Finbar project, it is hard to imagine that anything Mirvac construct or get involved with in the near future won’t give them a significant ROI. They simply are not going to build without profit as Seabreeze has rightly pointed out.
To continue on from the comments by Seabreeze, the nature of the beast in living in this part of the country says that families want to have their space, for their esky and boat, privacy and their own pool preferably free of jiggyboos coming down for their six monthly bath. So apartment style living won’t be on their agenda. So who else is going to pay $500K, $600K, and $900K for a shoebox with a view over suicide beach, or the delightful architectural expanse of Bulgara? The only ones who will buy will be perhaps a handful of cashed up companies with no regard for future expenditure, or investors who delight in gloating they have rental guarantees as part of the experience, and finally there will be those wannabe investors who bought in Docklands deciding to submit to another fiscal whooping.
So, now to the residential subdivision component of Mulataga:
If divine intervention facilitates this proposed development and blocks of land are made available to the masses either by Ballot, or by camping out in deepest, darkest (pun intended) Bulgara and surviving the night without getting bashed by jiggyboos, white trash or just having a knuckle dragging, smelly backpacker roofer trip over you because he’s been to the Tavern all night, he’s done 6 rounds with the gully monster and is now doing his best impersonation of a smashed crab trying to mate with one of the dugongs mentioned earlier, you manage to secure an allotment for under $250K, the only thing you need to consider then is how the hell am I going to afford the extra $600K to build a 4x2 with jiggyboo free swimming pool. I know, we can get those guys in Hedland that are importing sea containers from China to put one on the block for $400K – the missus won’t even notice the difference.
For anyone and I mean anyone from Premier Barnett down who thinks Karratha pricing will be impacted on to the point where housing becomes affordable because of this Mirvac arrangement, I’m sorry but I don’t believe it will be so. The apartments may feel the impact of an oversupply if the timing of construction and sales is poor, but residential land and ensuing construction of homes will remain prohibitively expensive.
From my limited, naïve, bitter & twisted perspective of life the universe & everything, I believe property pricing in the region will only be pushed down by a mixture of high interest rates and a massive drop in demand for resources in China & India, or if North Korea decides to once and for all blow the bejesus out of Japan with its nuclear arsenal to the point where Japan doesn’t need LNG any more.
So where does this leave us as interested property investors looking at Karratha from the outside? I think the wise, the researched & the creative ones will remain positive and reap varying degrees of reward.
Where does it leave Karratha future pricing? I think it will remain relatively insular, so purchase prices and rents will continue to be expensive and generally over and above Perth Metro area (interest rates, international resources demand and northern hemisphere non-nuclear activity remaining equal).
What will the future residential landscape of Karratha look like? Depends on how big the next really big cyclone is and whether all the smelly, drunken, backpacker roofers that tripped over and partially mated with you when you camped out for a block of land put in the really long Tek screws or the short ones!!
So, back to the article………….it’s not even one tenth of the real story.
Ian.
Ian - you should be writing blogs. That was gold.
If you don't want to put it up, may I link to this thread on my blog?
If you don't want to put it up, may I link to this thread on my blog?
Ian (WA),
Hmm...gully monsters, I remember them well.
The trend by the major dirt player there, is to employ people that it calls *Perth Based*. Monday to Friday in the Pilbara and at not a great deal more than Perth money either........the day of the wife & kids in the NorthWest is fast coming to an end.
A combined King/cyclone tide will test them.......KTA hasn't been clobbered for a while now.
Personally couldn't think of a nicer place to live........not. Give me TP anytime.
ciao
Nor
Hmm...gully monsters, I remember them well.
The trend by the major dirt player there, is to employ people that it calls *Perth Based*. Monday to Friday in the Pilbara and at not a great deal more than Perth money either........the day of the wife & kids in the NorthWest is fast coming to an end.
A combined King/cyclone tide will test them.......KTA hasn't been clobbered for a while now.
Personally couldn't think of a nicer place to live........not. Give me TP anytime.
ciao
Nor
Sorry Seabreeze, I meant to get to this bit earlier.
I actually think that line to be quite apt because the unsuspecting are guaranteed to be taken by sharks in Karratha (the property sharks that is).
Seriously, what sort of drop kick mung bean would make such a nauseating comment like that? It could only be a second rate, political buffoon who is totally out of his league in the public speaking arena, let alone as a diplomat of any standing.
Skinny soy, 1/4 shot latte, not too hot, easy on the crema on the back beach promenade anyone? Oh, and don't forget the Aeroguard.
Pffft!!
Ian.
Ian (WA),
Hmm...gully monsters, I remember them well.
The trend by the major dirt player there, is to employ people that it calls *Perth Based*. Monday to Friday in the Pilbara and at not a great deal more than Perth money either........the day of the wife & kids in the NorthWest is fast coming to an end.
A combined King/cyclone tide will test them.......KTA hasn't been clobbered for a while now.
Personally couldn't think of a nicer place to live........not. Give me TP anytime.
ciao
Nor
Hey NW
My younger sisters currently in Tom Price at the moment as a teacher (having done a few years in Port Hedland).
Have been there myself in my early days, beautiful country for growing rocks, they grow really well
King Tide's in Broome when I was a kid were fun; I remember waking up in bed because my hand hit the water
Its been interesting to watch Karratha grow over the last 4 years I've been visiting....paid parking in such a remote airport
